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Key Considerations for PF and TDS Compliance

PF and TDS Related Requirements


Provident Funds (PF) and Tax Deductible at Source (TDS) are two important components for both Employees and Employers. While PF focuses on providing retirement benefits and social security the latter concentrates on the idea of paying tax along with salary and earnings. Since the deduction of PF and TDS is mandatory for all companies, it is essential especially for Start-ups to know about the Regulatory requirements of both PF and TDS.


Understanding PF Eligibility: Requirements and Criteria


  1. For an organization to join the PF scheme it is necessary for them to have 20 or more employees. If they satisfy this criteria then they can give the benefits of PF to the employees.

  2. It is also an option for an organization to voluntarily obtain the PF registration.

  3. For employees with a salary of Rs.15,000 and above, it is mandatory to to open a PF account whereas employees of any income range can voluntarily open a PF account.


Contribution


Both employer and employee contribute an equal rate of 12% towards the PF. While the general contribution rate is 12% and is of basic salary, dearness allowance and retaining allowances, there is an exception for some organizations to have only 10% as their contribution rate.


Benefits


  • It is a welfare scheme that provides social security and retirement benefits.

  • Both interests and withdrawals of PFs are tax free.

  • Relaxations in the contribution rate for women employees to 8%.

  • Increases savings and helps in meeting future  financial needs .

  • Relaxations for Women and New employees who have been hired before March 2019. (Government has offered to  pay contributions of 12% to them) 



TDS Compliance: Important Due Dates You Need to Know


  • Due date for depositing the TDS to the government is the 7th of every subsequent month.

  • Due date for filing returns for the 1st Quarter is 15th of July.

  • Due date for filing returns for the 2nd Quarter is 15th of October.

  • Due date for filing returns for the 3rd Quarter is 15th of January.

  • Due date for filing returns for the 4th Quarter is 15th of May.


TDS Return Forms


  • For filing TDS returns from salaries Form 24Q is being used.

  • For filing returns on payments other than salaries Form 26Q is being used.

  • Form 27Q is being used to file returns for TDS payments to Non-residents.

  • Form 27EQ is being used to file TCS returns.


Penalties


  • A payment of Rs.200 per day shall be liable to be paid for late filing of returns until the return is filed ( Section 234E)

  • If a person fails to file a return before the deadline, the person is liable to pay  Rs. 10,000 to Rs.1,00,000 along with  the penalty of Section 234E under the order of AO. ( Section 271H).

  • If a person fails to pay the fine to the Government within the due date he/she shall be punished with imprisonment for a term between 3 months  to 7 years. ( Prosecution under Section 276B).

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